Understanding student employment: some dos and don’ts

Summer’s almost here, and many students will be hunting for a student job. It's not only the student in question doing the searching; student jobs raise a few questions for parents too.

1. Is the student still dependent on his/her parents?

For a student to be dependent on the parents, so that they can benefit from the tax rebate for dependent children, the following conditions must be met.

a) The student must be part of the family on 1 January of the year following the income year

So for the 2016 income year, the tax authorities will consider whether the student was part of the family on 1 January 2017.

Note: If the student has temporarily left the family home to pursue his/her studies (e.g. the student lives in a dorm or flat during the week), the student is generally still considered to be part of the family.

b) The student does not receive wages which are a business expense for the parents

For example, suppose the student helps her parents in their bakery during the holidays. The wages the student receives are a business expense for the parents, so the student is not considered to be a dependent.

But if the student is employed by her parents via a company which operates the bakery, she is still a dependent. Since the parents and the company are separate taxpayers, the student remains a dependent. It is the company that deducts the wages as a business expense.

c) The net livelihoods may not exceed a certain amount

That amount varies according to whether the parents are taxed jointly or individually.

Note: These amounts are different for students working under ordinary employment agreements than for those with student agreements.

"Livelihoods" means all regular, occasional or casual income, such as wages, unemployment benefits, sickness and disability insurance payments and living allowances. For students who are adults or emancipated minors, this also includes income from any real property they may own and earnings from capital.

Note: On the other hand, for persons who may be dependents, the following are not deemed to be part of their "livelihood":

  • The first tranche of 2,610 euros (2016 income) from allowances received by students in accordance with a student employment agreement;

A student employment agreement is a written employment agreement under which no more than 50 days are worked in total in a calendar year. No social security contribution is payable on the wages and no tax needs to be paid.

For example:

In 2016, a student receives a gross wage of €5000 (after deduction of the social security contribution or solidarity contribution) in the context of an agreement for student employment. Only the portion that exceeds €2,610, i.e. €2,390, will be counted as "livelihood". After deduction of the flat-rate costs (€2,390 x 20% = €478), the net sum amounts to €1,912. (= still a dependent)

  • Living allowances that are granted or increased under a court decision with retroactive effect and that are paid after the year to which they relate;
  • The first tranche of €3,140 (2016 income) of the received living allowances granted to the children;

For example:

In 2016, the student receives a gross living allowance of €6,000. Only the portion that exceeds €3,140, i.e. €2,860, will be counted as "livelihood". After deduction of the flat-rate costs (€2,860 x 20% = €572), the net sum amounts to €2,288.

  • Statutory family allowances, maternity benefits and adoption bonuses;
  • Scholarships;
  • Premarital savings bonuses;

The amounts in question are always net amounts. This means that a number of costs are deducted from the student’s livelihood, regardless of the nature of the income:

  • Either the actual substantiated costs that you can prove with supporting documents;
  • Or a flat-rate amount of 20%, with a minimum of €440 (2016 income), for the remuneration and benefits of liberal professionals or other types of gainful employment.

2. As a parent, can you still receive a family allowance if your child studies and has a student job?

If the child is aged between 18 and 25, you are still entitled to a family allowance while they study if you meet the conditions set out above.

3. Can a student be self-employed?

Some students prefer to be self-employed than to work for someone else. In such a situation, the following points should be taken into account:

  • To be able to work as a self-employed person, the student should in principle be an adult, i.e. 18 years old or over. To work as a craftsman (performing a service without supplying goods), the required minimum age is 16. However, permission from the parents or guardian is required.
  • Before embarking on self-employment, you should contact a recognised enterprise counter (business consultancy - ondernemingsloket). A commercial or craft business must provide evidence of entrepreneurial skills (basic management knowledge and sector or cross-sector competencies) in order to obtain registration. The enterprise counter will check that the business meets these conditions.
  • After taking advice from the enterprise counter, the next step is to contact the competent VAT audit service to check whether the activities are subject to VAT.
  • Students who work as self-employed persons must register with a social insurance fund for independent workers of their choice by no later than the day on which they start working, or register with the National Social Insurance Fund for Self-Employed Persons (Nationale Hulpkas voor Sociale Verzekeringen der Zelfstandigen). They must pay quarterly social security contributions amounting to 22% of their income (subject to exceptions).
  • Self-employed persons are also required to open a current account with a bank. This account must be separate from their private account and be used for transactions connected with their self-employed activities.
  • Self-employed persons are also subject to accounting requirements. These differ depending on the size of the business.

Students working as sole traders retain the family allowance provided they don’t work for more than 240 hours per quarter.

If the above formalities make embarking on self-employment seem less attractive, students also have the option of working as an assistant for another self-employed person. This means they assist or stand in for the self-employed person in the performance of their business activities, without being bound to them by an employment agreement. In principle, the assistant need not provide evidence of entrepreneurial skills as mentioned above, nor be registered with the Central Enterprise Databank (Kruispuntbank voor Ondernemingen). And if the assistant is younger than 20, he or she is not required to register with or contribute to a social insurance fund for independent workers. Incidentally, there’s nothing to prevent a student from being an assistant to their self-employed parents (or to just one of them). However, in this case the student can no longer be considered to be a dependent of his/her parents for tax purposes.

4. Personal income tax return

If you work as a student, you have to file a tax return for your personal income. In that return, you must list all of your taxable income, i.e. including the portion of the living allowances and other allowances which are not considered to be part of your "livelihood", and which are not counted when determining whether a student is a dependent of his/her parents.

The personal income tax return can be completed via Tax-on-web. If the student wishes to file a paper return, the appropriate form must be requested from the tax office.

In many cases, it’s advantageous for a student to file a personal income tax return. If the earnings fall under the tax-free threshold, the student will receive the deducted payroll tax amounts as a refund.

Author: Tanja De Naeyer

An interesting way to obtain capital more advantageously?
The Belgian tax treatment of the surrender of Dutch pensions under self-administration
Just before the end of the year, the tax administration finally made the decision and published a circular (Circular 2017/C/87 dated 22 December 2017), which addresses the Belgian treatment of the phasing out of the Dutch “pension under self-administration”.  Phasing out Dutch pensions under self-administration  Until 1 April 2017, a Dutch director-major shareholder or “DGA”
Who is now obligated to use this cash register?
The long-expected circular on the 'white cash register' has been published
Many words have been written over the past few years about the registered cash register system (the 'white cash register'). In exchange for a rate reduction for restaurant and catering services to 12% (instead of 21% - except for drinks), there was a requirement for hospitality businesses to work with a registered cash register system in order to combat fraud in the sector. The question over the p
The new tax rules
New car tax legislation: wheels in motion
Traditionally in Belgium, January is all about cars. Each year, the Autosalon (Motor Show) attracts hundreds of thousands of car fans to the Heysel. This year, the spotlight will not just be on the latest models of cars – the new car tax legislation will also be grabbing all the attention. So, once more, it’s time to set out the most important changes – in both corporation and personal incom
A simple and flexible way for companies to give a bonus to their employees
The profit premium from 1 January 2018
The new profit premium gives companies the opportunity to allocate part of their profits as a bonus to their employees in a simple and flexible way. The employees receive a premium, which amounts to either a fixed sum or a percentage of their wages without the employee being allocated a voting right in the company. Definition of profit premium and conditions The profit premium is a premium pa
Reduced corporation tax: in favour of or to the detriment of the taxpayer?
A new minimum remuneration requirement
The Summer Agreement, partially translated into the Corporation Tax Reform Act of 25 December 2017 (published in the Belgian Official Gazette of 29 December 2017) introduces a reduced corporation tax rate that falls to 25% by tax year 2021. Under certain conditions, a small company can even benefit from a reduced rate of 20% on its first tranche of € 100,000 of taxable revenue. However, the
A number of regulated professions are being abolished
Abolition of professional competence in Flanders: the consequences at a glance
In accordance with the Establishment of Businesses Act, every SME, natural person or legal entity wishing to engage in a commercial activity must prove the necessary entrepreneurial skills. For most professions, a basic knowledge of business management is sufficient but for a number of others, specific professional competence is required. This is in contradiction with European legislation that sta
The 4 action points thoroughly discussed
How the Summer Agreement affects the ATAD Directive
By now it’s hardly news that Belgian corporation tax will be comprehensively reformed as part of the Summer Agreement. The proposed reforms as set out in the drafts of the Programme Act (authorising government expenditure measures) and the Recovery Act were approved on 27 October by the Cabinet. The government presented the Programme Act bill to the House of Representatives on 6 November 2017, w
The December advance payment & the optional VAT system will be discussed
VAT news in brief
The December advance payment for those submitting quarterly returns.  VAT payers who submit periodic monthly returns are already familiar with the December advance phenomenon, and soon those who submit quarterly returns will also have to keep this requirement in mind. As part of the further simplification of the VAT legislation and administration, the Minister of Finance decided to scra
A comparison of the present & future legislation
What the Summer Agreement means for future capital reductions
Since the Summer Agreement was concluded there has been much discussion on the pro rata rule for capital reductions. Given that to date no definitive legislative texts have been published, this aspect of the corporation tax reforms remains murky and changes might still be introduced to the proposed regulatory measure.  The present legislation  In the event of a capital reduction, one
The consequences of a incorrect or incomplete registration
Why it is essential to ensure you are properly registered with the crossroads bank for enterprises
It is important for all companies to ensure that their details registered with the Crossroads Bank for Enterprises (CBE) are kept up to date. The CBE is the central register of the FPS Economy in which all the basic information of companies and their business entities are recorded. The information contained in the CBE is distributed to the various public services (such as the VAT authorities, the

Subscribe to our newsletter